Conditions continue to look good for our current analog officially kicking off in 7 sessions. VIX reversed (again) at the fan line off the May 9 highs and backtested an alternate channel bottom — nudging ES higher after a fairly ugly Wednesday.
Oil and gas are closing in on our next downside targets — confounding the “experts.” But, for now, futures are leaking higher and about to test the latest minor obstacle in hopes that the Fed will make everything better. Spoiler alert: it won’t.
Speaking of spoilers…DB has punted on its latest opportunity to break out.
And, BA somehow continues to remain aloft. The real test would be at the purple channel top. Note that it still “owes” us a dip to 325.42.
continued for members…
The latest…if SPX pushes through 3047, I’m fully prepared to be bullish. If not, we should know fairly soon.
The above chart is actually a weekly even though it’s labeled as daily. Here’s the actual daily version:
Oil and gas continue to slip…
While the continuing volley of dove-speak from Fed presidents is helping TNX toward its downside target.
Note that the 2s10s is back to a point of potentially breaking out — which would be bearish.
In currencies, EURUSD and DXY continue to be be virtually untradeable and probably will be until the end of the month.
The action should continue to be in USDJPY, which is likely headed to 101 and potentially to 98.50ish.
If the analog is to play out, investors will need to be disappointed on the 30th/31st. Note that a decision isn’t due till the 31st, so the 30th is potentially off by a day.
It could be that all the positive economic news will convince the Fed to stand pat one more time. Objectively, they could easily justify it — though it would certain amp up the battle with the White House.
It could be that they cut but Powell’s commentary unnerves people. There could be a big difference in market reaction, for instance, between “this is an insurance cut” and “OMG, we’re all going to die!”
I remain bearish and, as I’ve written before, was completely comfortable being short at 3017 on Monday — 1% below our target. If I’m wrong, we’re stopped out with a 1% loss – no big deal. But, my gut tells me we’ll get one last bounce closer to 3047 — ideally on a shooting star candle with a big intraday move.
More later…